by Stephanie Aguilar, Editor Chicago Industrial Properties
The Chicago area continues to prove that it’s one of the dominant CRE markets in the Midwest. A big part of this? The city’s ever-improving industrial market.
The Chicago-area industrial market continues to soar, with sales, leases and new construction activity increasing seemingly every quarter, good news for the brokers and developers who work in this space.
For the 26th consecutive quarter, the Chicago-area industrial market saw positive expansion in the third quarter of 2016, with nearly 2.4 million square feet coming off the market and 4.9 million square feet of new space coming online, according to the latest research by Newmark Grubb Knight Frank.
Despite the year-to-date absorption of 8.4 million square feet, research shows that vacancy remained static at 7.8 percent. That’s largely due to demand keeping up with supply.
Among the 17 projects–comprising 4.9 million square feet– completed in the third quarter, the Interstate-39 Corridor saw the largest delivery with Venture One’s completion of a 987,120-square-foot build-to-suit for 3M in DeKalb’s Park 88.
But it was the Interstate-80 Corridor that once again brought in the most absorption of any submarket during the third quarter, with 687,000 square feet. The total absorption in the area year-to-date now totals 1.2 million square feet. Meanwhile, vacancy spiked to 9.3 percent thanks to the 1.5 million square feet of speculative space added to the corridor.
Speculative industrial construction remains strong, too, with 57 spec projects in development throughout the market. Collectively, these projects total 18.6 million square feet. There are also plenty of shovels in the dirt for build-to-suits, which are currently seeing 8.9 million square feet in the works.
Two of the largest build-to-suit projects under construction are rising in Joliet. This includes a 1.3-million-square-foot facility for IKEA in Laraway Crossings Business Park and a 1.4-million-square-foot distribution facility for Mars Candy, both of which are scheduled for completion in the first half of 2017.
Market experts are still confident that the market will remain strong. NGKF research attributes factors like rent growth, which continues to accelerate; an expanding construction pipeline; and a reliably strong sales volume, as great signs.
Cushman & Wakefield research shows that developers are continuing to put their land inventories into production, preparing to bring more space onto the market. The firm reports that over the next few quarters, these developers will have to closely watch the demand. If construction activity stays put, vacancy is expected to stay flat.